The FCA’s decision to cap the cost of rent to own goods will help hundreds of thousands of people who use the high-interest agreements, Citizens Advice says.

The charity has also welcomed the decision by the regulator to place restrictions on other charges, such as warranties, insurance and arrears.

Previous research from Citizens Advice found that people who were at the time signed up to a rent-to-own agreement could save £62 million on 245,000 products if a cap was enforced.

Gillian Guy, Chief Executive of Citizens Advice, said:

“This cap is a victory for people who struggle with the runaway costs of rent-to-own agreements.

“These products are aimed at people who have little choice but to resort to this type of credit, yet they come with crippling interest rates on prices that are far higher than anywhere else on the high street.

“A cap gets to the heart of the problem by stopping costs from spiralling out of control and pushing people into further debt.

“Our evidence has repeatedly shown that well-designed caps can reduce the harm high-cost credit can cause, as they have done in the payday loan market.”